Volume 8, Issue 5, May 2023
ISSN No:-2456-2165
Financial Services Access and Growth of Small and
Medium Enterprises in Mombasa City, Kenya
1
Cheror Cheruiyot Haron, 2Dr. Ambrose Jagongo
1
MBA student, 2Lecturer
Kenyatta University
Abstract:- Small scale and medium businesses (SMEs)
contribute immensely towards the gross domestic
product (GDP) of any nation. They account for a large
percentage of the jobs in many countries. In
consideration of these, the researchers sought to find out
if a change in financial services access brings out a shift
in growth of SMEs in Mombasa city, Kenya. The study
focused on businesses in existence for five years after
inception. Primary data was obtained, from 345
enterprises through a purposive random sample from
licensed SMEs in the financial year 2020/2021, in
Mombasa County. Except for banc assurance services
the study showed a positive correlation between lending
services, business training, bancassurance and digital
banking with growth of small and medium enterprises.
However, it found out a negative association between
financial saving and the dependent variable. In
consideration of these, the study recommends financial
institutions to facilitate good working relationship
between their credit departments with SMEs. This, in
turn will boost uptake of credit services for realization of
growth among small and medium enterprises. Insurance
institutions to coordinate their partnership with banks to
be able to accelerate uptake of bancassurance services.
Governments to establish incentives on ICT firms that
innovate products targeting financial services access and
SMEs operations integrations. Furthermore, the county
governments to fund trainings conducted by financial
institutions to encourage them conduct frequent
seminars and workshops among the SMEs owners and
managers. This willboost knowledge and skill base, that
ultimatelyassist businesses owners run their SMEs
efficiently and effectively.
Keywords:- Bancassurance, business training, digital
banking, financial saving, financial services access, growth
of small and medium enterprises, lending services.
I. INTRODUCTION
Innovative young businesses are vital in creating new
jobs and innovation (Sedlacek and Sterk 2014).
Entrepreneurial start-ups generate and bring in new
innovations. They help create firms and become movers in
the economy (Global Entrepreneurial Monitor,2017).
Developing nations like Kenya needs more SMEs to
prosper. This is due to government revenue generation and
integration of skills through informal sector.
Ultimately,SMEs will boost attainment of visions 2030,
which is a Kenya’s road map to achievement of
industrialized nation, together with increasing annual GDP.
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International Journal of Innovative Science and Research Technology
May, 2023
In 2014, 80 percent of jobs were created by SMEs
startups in Kenya and contributed 98 percent of all business.
The informal sector accounted for 79 percent of these
businesses (Kenya National Bureau of Statistics, 2016).
However, the inability of small-scale businesses to grow and
graduate to medium size has led to vacuum called ‘missing
middle’ (Bunyasi, Bwisa and Namusonge,2014). Growth is
second to survival when it comes to important goals of a
firm.
II. FINANCIAL SERVICES ACCESS
Obtaining financial services at affordable rates and fair
terms is a challenge to many small-scale and medium
businesses. Access to finance by these businesses means
they can physically access lenders (Chowdhury and
Alam,2017). This is an important factor in promoting
sustainability and growth of SMEs start-ups. Kunt, Klapper
& Singer (2017) posits that financial service inclusions and
access means that adults can obtain a wide range of the right
financial services. It starts by having an account at mobile
service provider to carry out transactions. It further involves
being able to utilize loan services that enables one to exploit
available opportunities and mitigate their risk through
insurance services.
According to Matiangi (2016) major financial services
are savings, micro-loans, training and insurance services
which are consumed by low-income earners and SMEs
worldwide. Wanjiru (2016) on the other hand, noted that
financial services are mainly transfers, insurance, savings
and credits offered by microfinance organizations. The
researchers considered financial services as all services
offered by financial institutions both credit and non-credit.
Most of the financial institutions offer micro-credit on
the strength of a physical collateral. However, with the
inception of SACCOs members guarantee one another based
on their savings. Kenya Bankers Association, (2016) opines
that classification of loans based on the repayment period
gives a clear picture of loan performances. It is against this
backdrop that the researchers looked at how growth of small
and medium enterprises was affected by lending services
based on repayment period.
Kenyan banks use e-banking to face out the traditional
way of doing business (Githuku and Kinyuru,2018).
Thisplatform if further fueled by the tech-savvy customers.
Consequently, this has led to an increase in digital financial
transactions, banking through internet and mobile phones.
Digital banking has been widely adopted by Kenyans due to
its convenience. This has provided e-wallet which has been
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Volume 8, Issue 5, May 2023
propelled by social media, advanced mobile device,
networks, enhanced digital security and access to internet
everywhere. Mobile account, accounted for a third of all
accounts with its widespread being felt in East African
countries. It is estimated that Kenya leads in the number of
mobile money account in East Africa at 58%.
Wanjiru (2016) stated that, with the increase risk
associated with business environment, insurance services
have gained popularity among entrepreneurs. Although
many people and entrepreneurs use saving and credit to
manage their risks, insurance add more value. Matiangi
(2016) proposed that organizations offering financial
services should offer savings and insurances services not
only to the high-end users but also small businesses.
Due to dynamic and highly competitive environment
banks have had to come up with new products to gain
competitive edge. One such product is bancassurance. This
term is the combination of bank and insurance where banks
sell insurance policies. Hence banks are playing an
intermediary role between insurance and customers. The
main reason for the proliferation of this products is trust,
personal relationship and convenience from the banks
perceived by customers.
Business training involves activities such as budgeting,
entrepreneurship and business planning. Laney (2013)
opined that entrepreneurship training is undertaken with
assumption that acquisition of these skills helps reduce
barriers posed by lack of education. It is assessed that there
are attributes that are not inborn, that can be developed.
Tambwe (2015) posits that this training boost socio-
emotional, technical skills and entrepreneurial activities
together with improvement of probability of starting a new
business.
Money can be put aside for future use with the
assistance of financial institutions. Small scale business
owners prefer saving through these institutions due to
minimal theft, curbing of impulse spending and assisting in
greater achievements of development goals. Furthermore,
there are different avenues provided by banks for one to
save including saving account, fixed deposit accounts,
FOSA saving and BOSA saving accounts. There are several
reasons why people save including to make large purchases,
for investments, business, for old age and future expenses.
III. GROWTH OF SMALL AND MEDIUM
ENTERPRISES
Definitions of SMEs is commonly based on number of
employees, annual turnover or total value of assets.
Typically, these are organizations with employees between
one to 250 in number irrespective of their legal forms I.e.,
family, sole proprietorship, partnership, company or
cooperative. Many authors view business growth in terms of
firm’s performance indicators. These performance indicators
have been broken into two categories; financial (economic)
and non-financial (Rahman and Ramli,2014). Consequently,
most organizations analyze their growth based on financial
ratios (Husna and Deslyanti, 2016). This is beneficial as an
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International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
internal analysis for management to check financial
achievements for further planning.
Ratios are categorized into various classes based on
what it measures. Those that measure growth include return
on assets, profits, employees’ growth, gross profit margin,
growth of sales, survival rate and employees’ growth.
Customer satisfaction, achievements, corporate reputations,
personal development, happiness and market share are some
of the non-financial measures (Essel, Adams and
Amankwah, 2019).
According to Mohamad, Mohd and Mohezar (2017)
the choice of business growth indicators depends on
academic disciplines. Researchers in geographical studies
together with those in economics use the number of
employees. Furthermore, policy makers and government
administrators use employment levels. Scholars in finance
use financial indicators from accounts department to
measure firms’ growth. “Financial measures are simple to
measure and easier to understand” (Essel, Adams and
Amankwah,2019).
Investors may look more at financial statements and
pick out gross profit margin, return on sales, return on
equity, return on capital employed, revenue growth and cash
inflows. Return on investment (ROI), return on assets
(ROA) and sales gives how well business uses its assets to
generate a return. Although these indicators are derived
from accounting records that might be prone to
manipulations, well-kept records can give a reliable picture
of a business growth (Essel, Adams and Amankwah,2019).
To avoid depreciation influencing the results of the analysis.
This study calculated one of the profitability ratios I, e gross
profit (GP) margin to measure growth. Calculation of this
ratio uses data on sales and cost of goods sold, information
that can easily be obtained from the SMEs records.
According to Welsch, Price and Stoica (2013) small
and medium business owners’ motivations are intertwined
with that of their businesses. Motivations to grow a SMEs
by owners comes from their ‘growth intentions’. However,
there are other business owners who are not interested in
growth. Consequently, this group of businesses are more
likely to collapse within their first years of inceptions (Levie
and Autio,2013). This study assumed that the owners had a
positive intention to grow.
IV. FINANCIAL SERVICES AND GROWTH OF
SMES IN KENYA
A study was done by Omondi and Jagongo (2018) on
services of micro-financial institutions and how theyaffect
financial performances of youths’ SMEs. They found out a
positive relationship between access to financial training and
connection to MFIs, togrowth of the youth SMEs. Research
done by Muchiri (2018) on how adoption of mobile banking
has affected performance of SMEs opined that, the element
of convenience, cost, ease of use, security and acceptability
enticed SMEs to like this banking platform. Maina (2014)
did examined how bancassurance services does influence
performances of the selected insurance institutions. The
study showed bancassurance being positively related to
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Volume 8, Issue 5, May 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
financial performances of insurance institutions. Maina in falls within the range of the current study. The researchers
his conclusion proposed for the insurance organizations to are confident this response rate gives the optimal
foster their partnership with banks since it increases their conclusion.
penetration, financial integration and innovations of
products and services. VI. CONCEPTUAL MODEL

Nganu (2018), carried out a study on the influence of The researcher came up with the model below to
training on entrepreneurship with attention to SMEs in the explain the variables relationship;
ICT industry. The research findings showed an
improvement in performances of these businesses with Y = βO + β1X1 + β2X2 + β3X3 + β4X4 + β5X5 + £
increased level of training.Jagongo (2012) carried out a
Where the symbols used are; Y = Growth of SMEs; X1
study on saving mobilization with attention to growth on the
= Lending services; X2 = Digital banking; X3 =
businesses owned by women. The researcher paid attention
Bancassurance services; X4 = Business training; X5 =
to the elements constraining these enterprises. The study
Financial savings; £ = The Error; βo, β1, β2…. β5,
agreed, that education, management skills level, cultural,
represented the regression coefficient and X1, X2……X5
marital affairs, religious attachments and age had significant
gives the independent variables while the £ gives the
propensity among women entrepreneurs.
random variables in the Y that X variable could not explain
Mwaniki (2014) carried out a study on how literacy on in this study.
finance can influence growth of SMEs. The study had a
VII. DEMOGRAPHIC INFORMATION
focus of unravelling how management of debts, banking
experience and maintenance of proper books of accounts A. Gender
affects SMEs growth. This study found out that debt The questionnaire contained a leading question on
management and book keeping literacy had positive effect gender. This was included to ascertain gender distribution of
on SMEs growth. the respondents under study. The study showed that,
majority of the participants were males at 91.4%. The
V. RESEARCH METHODOLOGY
female only accounted for 8.60%.
The study adopted a descriptive study. The researcher
B. Age Distribution
attempted to study the SMEs within Mombasa City in their
Age categories were put between 18 years and 35,
natural settings. An appropriate research design seeks to
depicting youth, the bracket of 36 to 46 years showing those
ensure that findings get a satisfactory answer to the research
respondents in their prime years. The age bracket of 47 to 55
questions with absolute clarity (Cooper and Schindler,
years,56 to 60 years together with those above 61 years were
2014). Descriptive approach was chosen because it gave a
assessed as well. Research depicted respondents between the
detailed analysis of phenomenon of this study. The results
age bracket of 56 to 60 yearsas majority at 30.33%. This
and findings can then be inferred in a larger similar
group was followed by those between 47 to 55 years at
situation. The study was analyzed to get information relating
24.64%. The respondents with 36 to 46 years accounted for
to the status of the issue under study and describes what
19.43% close to those with 61 years and above at 18.01%.
exist within the variables (Cresswell, 2014).
The youth accounted for a 7.58% which was the lowest.
The researcher obtained the target population from
C. SME Ownership
SMEs in Mombasa city who had been in existence for the
last five years up to financial year 2020/2021. This was The researcher sought to determine the respondents’
represented by 34,501 licensed SMEs according to classes. This was in terms of whether they own the SME or
are management employees delegated with daily decision of
Mombasa Licensing Department in the financial year
running the concerns. Findings showed managers were more
2020/2021. A sample of 345 representing 10% of the
population was selected. This research study used purposive in numbers at 57.41% in comparison to owners of the
business at 42.59%. This portrays many SMEs are being run
random sampling due to its focus on five years existence.
by managers than owners.
The researcher utilized two types of questionnaires i.e
open and closed ended to collect primary data. Closed ended D. Highest Education Level Attained
type gave ease of analyses while open ended captured data The study sought to determine the level of education
attained by the respondents. This was classified into primary
not collected by the closed ended questionnaires. Primary
school, secondary school, diploma/undergraduate level,
data was collected in form of questionnaires that were
dropped and some emailed to the owners or managers. postgraduates denoting masters’ holders and doctoral level.
Contact information of these businesses were obtained from Undergraduate/diploma qualifications were mostly attained
by SME owners and managers with a percentage of 51.18%
the Mombasa County Licensing Department.
followed by secondary school level at 29.38%. Those with
Out of the 345 questionnaires administered, it is only primary school, postgraduate and doctoral level had 16.59%,
211 that were answered and returned. This figure 2.84% and 0.0% respectively.
represented 61.1% rate of response while the rest, 134
questionnaires were not answered nor reverted. According
to Allen (2016) a response rate of 50% is satisfactory. This

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Volume 8, Issue 5, May 2023
E. Types of Financial Institutions
The respondents were asked to state the type of financial
institution they obtain high number of financial services
from. The categories offered for considerations were banks,
SACCOs, microfinance institutions and others, a category
they were to specify. Most of the respondents use banks as
their primary source of financial services at 81.99%.
Savings and credit cooperative societies accounted for
10.90% with micro-finance institutions being utilized at
6.16% by the respondents. Other financial institutions
offering services under study accounted for 0.95%.
International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
VIII. DATA ANALYSIS
A. Descriptive Statistics
The researcher calculated mean and standard deviation.
During this analysis those areas of the questionnaire
expressed in range, the upper and the lower limits were sum
together and averaged to get the mid-point. The following
tables gives the results of this analysis according to the
objectives of the study.
B. Lending Services
The researcher sought to ascertain how lending services
categorized in three types of loans were utilized by the
respondents. Loans considered were short term, medium
term and long-term. These credits were measured in number
of times the loan was received.

Table 1: Cumulative Frequency of Loans Received

Period Short term medium term long term

2016-2017 102 84 77
2017-2018 188 52 61
2018-2019 93 47 89
2019-2020 167 30 59
2020-2021 102 16 63
Mean 3.09 1.08 1.65
Std deviation 1.69 1.22 1.58
Average mean 1.18
Average Std Dev. 1.498

Source: Authors’ Computation (2022)

Table 1 shows that short term loan was mostly utilized
(M=3.09 and SD= 1.69). The standard deviation illustrates
that most of those who used short term loan, their frequency
of usage was fairly around 3.09. Long term loan was fairly
utilized second to short term loan (M=1.65, SD=1.58). This
was above the overall average mean (M=1.18, SD=1.498).
This indicates that the number of frequencies of long-term
loan utilization per respondent was 1.65 with standard
deviation showing most of the respondents’ utilization
frequency was closer to the average. Medium term loan was
the least utilized (M=1.08, SD =1.22).
C. Digital Banking
In gauging the digital banking access, the study looked at
M-pesa services, debit/credit notes, Internet banking and
other mobile banking. The table below summaries these
findings:

Table 2: Cumulative Frequency of Digital Transactions Performed

Other mobile Debit/ Internet

Period M-pesa money credit cards banking

2016-2017 20394 2569 1689 2290

2017-2018 25642 1862 1564 1501
2018-2019 22569 3269 1356 1569
2019-2020 23491 2762 1682 1007
2020-2021 26911 3345 3250 2669
Mean 564.01 65.44 45.22 42.82
Std Deviation 318.18 67.21 39.87 34.01
Average Mean 143.54
Average Std Dev. 115.067

Source: Authors’ Computation (2022)

According to the table 2 above M-pesa transactions accounted for the second share of the digital transactions
had the highest frequency (M=564.01, SD=318.18). This (M=65.44, SD=67.21). Debit and credit cards were also
shows that this platform was the most used digital avenues assessed (M=45.22, SD=39.87). The standard deviation of
for carrying out transactions. Other mobile avenues 39.87 depicts most of the respondents being close to 45.22.

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Volume 8, Issue 5, May 2023
Internet banking accounted for the least digital platform
under usage by the respondents (M=42.82, SD=34.01).This
was lower than the average mean.
International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
D. Bancassurance Services
The researchers wanted to establish how bancassurances
services is being adopted by the respondents.

Table 3: Cumulative Amount of Premium Paid

Amounts in “1,000”
Life Business Motor Vehicle Fire
Period assurance insurance insurance insurance

2016-2017 2564.9 16780 72594.3 1086.97

2017-2018 956.42 9846.2 6495.0 2515.38
2018-2019 2963.15 12465. 115943.2 3034.23
2019-2020 3564.92 16879.2 86482. 2605.68
2020-2021 1975.3 14532.03 75462.3 2236.44
Mean 56.99 334.13 196.89 54.40
Std deviation 124.00 580.29 309.00 289
Average mean 126.25
Average Std Dev. 324.57

Source: Authors’ Computation (2022)

The results as depicted in the above table 3 gives
business insurance with the highest respondent’s frequency
(M=334,130, SD=580,290). Motor vehicle insurance was
second (M=196,890, SD=309,000). This was larger than the
average mean of 126,250. Life assurance came third in
terms of frequency of utilization (M=56,990, SD=124,000).
This indicates that respondents paid less amount of premium
through bancassurance in comparison to the average
amounts of premiums paid through this platform
(M=126,250). Fire insurance reported last in terms of
amounts of premiums paid through bancassurance
(M=54,400, SD=289,000). This still was below the average
mean of 126,250.
E. Business Training
The number of trainings attended by respondents were
determined so as to gauge its impact on the growth of
SMEs. These trainings under consideration were
entrepreneurial, managerial and financial in nature.

Table 4: Cumulative Number of Business Trainings Attended

Entrepreneurial Business Financial

Period training management management

2016-2017 91 127 141

2017-2018 108 156 127
2018-2019 87 65 134
2019-2020 129 144 83
2020-2021 95 82 91
Mean 2.41 2.72 2.72
Std deviation 1.59 1.72 1.64
Average mean 1.57
Average Std Dev. 1.650

Source: Authors’ Computation (2022)

As per the table 4 above business and financial
management trainings had the same utilization (M= 2.72).
However, business management trainings had the highest
standard deviation (SD= 1.72). This shows existence of
variations in business management frequency than financial
training (SD=1.64). It implies that most of the respondents’
attendance frequency to financial trainings was fairly close
to the mean.
F. Financial Saving
The study assessed the amounts of money saved through
the four avenues offered by financial institutions. These
avenues are FOSA, BOSA, saving accounts and fixed
deposits accounts.

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Volume 8, Issue 5, May 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Table 5: Cumulative Amount of Money Saved
Amount in “100,000”
FOSA BOSA Saving A/C Fixed
Period saving saving fund deposits

2016-2017 8.4525 127.3335 21.294 1569.34

2017-2018 134.13015 394.56 25.691 1023.94
2018-2019 62.1417 267.35 69.1755 956.2788
2019-2020 126.5887 586.9722 145.69 1597.6511
2020-2021 15.5037 186.723 45.7633 1278.92
Mean 1.64 7.41 1.46 30.46
Std deviation 8.62 28.63 6.21 172.57
Average Mean 13.54
Average Std Dev. 54.00
Source: Author’s Computation (2022)

As per the table 5 above fixed deposits, accounted for
the largest amounts saved (M=3,046,000, SD=17,257,
0000.Back-office savings (BOSA) was second in amounts
saved (M= 741,000, SD= 2,863,000). This mean was lower
than the average mean. Front office saving services and
savings accountsgave (M=164,000, SD=862,000), and
(M=146,000=SD=621,000) respectively.
G. Inferential Statistics
This is the analysis were data obtained from the sample
is used to make a generalized conclusions of a populations
of the observation under study. The researchers carried out
two analyses under this sub-section. These are correlation
and regression analysis.
H. Correlation Analysis Results
This measures the strength of relationship existing
between two variables in a linear manner. This correlation is
denoted by r, with its value expected to fall in the range of -
1 and +1. A value of r when zero implies that there is no
linear relationship. Values above zero to +1 denotes a
positive relationship with the strength indicated by r value.
Lower values than zero to -1 indicates a negative
relationship. Based on the data obtained under this study, the
correlation table below summarizes it.

Table 6: Correlation Analysis

Gross Lending Digital Banc- Business Financial
Period profit servces banking assurance training savings
Margin
Pearson
Gross profit Correlation 1
margin Sig.(2-tailed)
Pearson
Pearson
Lending Correlation 0.710** 1
Services Sig.(2-tailed) <.0.001
Pearson
Pearson
Digital Correlation 0.478** 0.458** 1
banking Sig.(2-tailed) <.001 <.001
Pearson
Pearson
Bancass- Correlation 0.040 -0.039 0.126 1
urance Sig.(2-tailed) <.001 0.573 0.068
Pearson
Pearson
Business Correlation 0.288** 0.262** 0.156* 0.060 1
training Sig.(2-tailed) <.001 <0.001 0.023 0.386
Pearson
Pearson
Financial Correlation -.015 .020 .096 -.021 .013 1

Saving Sig.(2-tailed) .826 .775 .163 .764 .851

Pearson

Source: Author’s Computation (2022)

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Volume 8, Issue 5, May 2023 International Journal of Innovative Science and Research Technology
The table 6 above shows all the variables under the
study correlating with each other at a value of +1. This is
normal as any variable will always correlate with itself.
Lending services had a positive and significant relationship
with growth of SMEs (r =.0710, p = <0.001). This means
both the lending services (loans) and growth of SMEs
change in the same direction implying a unit change in
lending services triggers a positive change of 0.710 in
growth of SMEs. A study done by Ibrahim and Ifeyinwa
(2020) on the effect of banking lending on the growth of
selected SMEs in Nigeria gave similar findings; loans
having a strong and statistically significant relationship with
growth of SMEs. Digital banking services and growth of
SMEs were found to have a positive correlation with each
other. The relationship was found to be statistically
significant (r = .478, p = < 0.001).
Bancassurance services depicted a positive correlation
with SME growth. The relationship is shown to be
statistically significant (r = 0.040, p = <0.001). However, the
shift is marginal at 0. 040.This implies that a unit change in
ISSN No:-2456-2165
bancassurance services brings a positive change of 0.040 of
growth of SMEs. Although it is marginal the table 6 shows
it to be statistically significant. Business training and growth
of SME was also found to have positive correlation with
each other (r = 0.288, p = < 0.001). This relationship looks
small but it is statistically significant as shown by value of r.
This conclusion was also arrived at by Nduta (2016) who
found out strong positive change in training programs with
SME growth (r = 0.766, p = <0.01). Financial savings and
growth of SMEs was found to have a negative correlation(r
= -0.015, p = 0.826). This relationship is statistically
insignificant has shown by the value of p being more than
0.05. Hence this associations shows a marginal negative
change of 0.015 that is not significant.
I. Regression Analysis
This is an analysis used to determine the association
between a dependent and independent variable. It is put in
form of a model that can be used to generalize how
population behave on the modelled observations.

Table 7: Model of Fitness

Model R R Square Adjusted R Square Std. Error of Estimates

1 .740 .547 .536 13.6401

Source: Author’s Computation (2022)

From table 7 above, R square adjusted is 0. 536. This explanation as it is above 50%. Hence, when all factors are
denotes that all the five dependent variables under study can held constant, changes in these variables causes a 53.6 %
explain 53.6% of the total variation in the dependent change in SMEs growth.
variable, which is growth of SMEs. This is a fair satisfactory

Table 8: ANOVA

Model Sum of Squares df Mean Square F Sig

Regression 46056.456 5 9211.291 49.509 <.001b

Residual 38140.982 205 186.054
Total 84197.438 210

Source: Author’s Computation (2022)

This analysis shows how significant the overall model This then means that the model is statistically significant to
is, in predicting the dependent variable by the independent predict dependent variable. This is by using independent
variables considered. According to the table 8 above the F variables under consideration, taking into account high
statistic was 49.509 (p <0.001) which was less than 0.05. value of F and a small p value.

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Volume 8, Issue 5, May 2023 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Table 9: Regression Model Coefficients

95.0%
Unstandardized Standardized Confidence
Coefficients Coefficients T Sig. Interval for B
Std Lower Upper
Model B Error Betta Bound Bound

(Constant) 9.135 1.687 5.413 <.001 5.808 12.462

Lending Services 8.030 .730 .601 11.002 <.001 6.591 9.469

Digital Banking .033 .009 .188 3.485 <.001 .014 .051
Bancassurance .002 .003 .033 .694 .488 -.004 .008
Business Training 1.204 .593 .099 2.029 .044 .034 2.373
Financial Saving -.0.17 .018 .-046 -.969 .334 .052 .018

Source: Author’s Computation (2022)

The table 9 above presents regression coefficients of
the model of the variables under study. This presents an
overall relationship between the dependent variable and all
the independent variables put together. The constant for the
model is 9. 135.This is the value of the dependent variables
(growth of SMEs) when all the independent variables
assume zero value. This constant is significant (p = < 0.001)
which is less than the p value of 0.05. The table shows
lending services and growth of SMEs being positively and
significantly related (β = 8.030, p = <0.001). The p value
was measured at 0.05 significant level and the p value for
lending services is 0.001 below the 0.05. The β value of
8.030 means that one unit increase in lending services
triggers a positive increase of 8.030 in growth of SMEs.
Digital banking and growth of SMEs have a minimal
positive association that is statistically significant (β =
0.033, p = <.001). This imply that a unit increase in digital
banking leads to a positive increase of 0.033 of the growth
of SMEs. Although this shift is marginal it is statistically
significant based on the value of p being lower than 0.05.
The table 9 further presents the relationship between
bancassurance services and growth of SMEs (β = 0.002, p =
0.488). This shows a positive relationship of a marginal
0.002. However, this relationship is not statistically
significant judging by the value p which is higher than 0.05.
The relationship between business trainings and
growth of SMEs is a positive association (β = 1.204, p =
0.04). This interaction is seen to be significant as the value
of p is lower than the value of 0.05. Financial savings and
growth of SME is found to have negative association which
is statistically insignificant (β = -0.17, p = 0.334). Hence a
unit increase in savings leads to a negative change in growth
of SMEs. However, this relation is insignificant as the value
of p is higher than 0.05.
Based on the above table the equation obtained is:

Y = 9.135 + 8.030X1 + 0.033X2 + 0.002X3 + 1.204X4 -0.17X5 + ε

Where;

Y = Growth of Small and Medium Enterprises (GP Margin) - Dependent variables

X1 = Lending Services (Frequencies) -Independent variable
X2 = Digital Banking (Frequencies) - Independent variable
X3 = Bancassurance services (Amount) - Independent variable
X4 = Business Trainings (Frequencies) - Independent variable
X5 = Financial Savings (Amount) - Independent variable
ε = Error term

IX. CONCLUSION
From the preceding section it is clear that financial
services access has had a positive impact on the growth of
SMEs in Mombasa city, with the exception of financial
savings. Lending services provided by the financial
institutions in form of short term, medium term and long-
term loans, have assisted SMEs in the growth of their
businesses. AlthoughBancassurance services which is one of
the new products in banking industry has been sparingly
embraced by the SMEs,it had a positive impact on the
growth of SMEs.
Digital banking has been highly taken up by the SMEs
in Mombasa city with M-pesa service frequently used as one
of the digital banking avenues. Business training mostly
attended by SMEs are entrepreneurial, managerial and
financial and contributes positively to SMEs growth.
Mombasa city SMEs owners and managers considers
financial skills more important than entrepreneurial and
management skill. However, growth of SMEs was
negatively impacted by funds set aside from the business in
form of savings.

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Volume 8, Issue 5, May 2023
X. RECOMMENDATIONS
Based on the above conclusions it is evident that for
growth to be realized, financial service access is inevitable.
Financial institutions need to facilitate a good working
relationship between their credit department and SMEs with
microfinance, SACCOs and other financial institutions
being encouraged to move closer to the SMEs to understand
their credit needs. Insurance institutions should coordinate
their partnership with banks to fast track the uptake of
bancassurance services. The government to set up policies
that establish incentives on ICT organizations that innovates
on products targeting financial services and SMES operation
integration. This will encourage making and receiving
payments digitally seamless. These products should be
convenient and less costly to use.
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